Call buyers take HeartWare's pulse


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HeartWare is waiting for a key regulatory approval, and the bulls are hopeful.

optionMONSTER's Heat Seeker tracking system detected the purchase of 2,000 May 70 calls for $4 against open interest of just 73 contacts. The trade accounted for almost all the option volume in the medical-device company yesterday.

Investors are holding their breath to see whether the Food and Drug Administration approves the company's HVAD heart pump. A decision is expected this month.

Implied volatility has more than doubled in the last two weeks to more than 80 percent as the market prices in the possibility of a dramatic move. That's more than triple the stock's historical volatility.

HTWR rose 1.75 percent to $62.82 yesterday. It's been fluctuating in a range for the last year and is down 14 percent from the beginning of March. But the pending FDA decision is dominating sentiment in the name.

Owning calls lets the investor get long while limiting risk. (See our Education section)

Overall option volume was 14 times greater than average in yesterday's session, with calls accounting for a bullish 95 percent of the total.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing , Options

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